SMIC's biggest increase in the year is good for the industry to hit a new round of price increases in semiconductor foundry.

The haze of global chip shortage is still lingering, and the rising prices of the industrial chain are rising one by one. Today, DigiTimes has once again exposed the new trend of price increases in wafer factories, and UMC, which has led several price increases this year, has reported that Q1 may raise its offer again next year, with an increase of about 10-15% for 40nm processes and 5-10% for other processes. With a view to the current limited capacity growth, with the rising prosperity of the semiconductor industry, the company's performance will be pushed to another floor.

Another generation of industry leader TSMC held a regular meeting of shareholders today. Wei Zhijia, president of TSMC, predicts that the global output value of semiconductors (excluding storage) will grow by 17% this year, and the output value of wafer foundry will grow by 20%.

In addition, SMIC bucked the trend and closed up 10.25% at 57.2 yuan in late trading today-the biggest one-day gain since SMIC rose 12.7% on October 12 last year.

The new production capacity needs to be released urgently.

Downstream markets such as consumer electronics, 5G and the automotive industry are heating up, leading to a strong demand for chips. Helplessly, manufacturers' full capacity is also difficult to fill the gap, and the wafer generation delivery period is constantly lengthening. The semiconductor delivery cycle lengthened to 19.3 weeks in June, up 1.5 weeks from May, according to Susquehanna Financial Group.

Under the condition that supply falls short of demand, the wafer foundry industry continues to rise. Q3 TSMC, UMC and LSMC have risen for more than one round, with an increase of up to 30%. When asked about the price increase plan at the beginning of this month, SMIC, which is soaring today, also said that the integrated circuit industry has its fluctuation cycle, and the company will make corresponding price adjustments after good communication with customers according to the changes in the relationship between supply and demand in the industry.

On the other hand, manufacturers are also aggressively seeking to expand production. In the first half of this year, 22 provinces and cities in China signed more than 220 new semiconductor projects, with a total investment of more than 300 billion yuan, according to data released by Ji Weibo yesterday. Among them, more than 11 third-generation semiconductor signing projects and more than 14 touch display signing projects were added, and the industrial layout of the two major areas continued to deepen. Globally, SEMI expects 19 new fabs to be built this year and 10 more next year.

According to Fu Tianzi and Wu Liuyan, analysts at Everbright Securities, the shortage of wafer foundry capacity is expected to continue until 2022, and although there is inventory correction pressure in the later stage, it is expected to be hedged by structural demand growth opportunities. The release of new production capacity in the future will also drive the continued growth of industry income.

Haitong Securities reported on July 22 that the structural tension in semiconductor production capacity is likely to continue in the coming year. The demand for superimposed AIOT, automotive electrification, 5G MCU, power devices, analog chips, storage and some advanced process logic IC increases. This round of semiconductor business cycle is longer, the profitability of the industry is improved, the valuation is at the average level, and there is more room for growth.

It is worth mentioning that Wu Jisen of Guohai Securities pointed out that the construction period of the wafer production line is long and the cost is high, of which about 80% of the cost is spent on purchasing equipment, and the semiconductor core equipment and materials serve as the basis for capacity expansion. The relevant manufacturers' performance growth is highly deterministic and is expected to fully benefit.